"The home of the terrorist, who killed an Israeli baby and a young woman on October 22 in a tram station in Jerusalem was destroyed in Silwan," the military said in a statement on Wednesday.

Four families who lived in the building - including that of the attacker Abdel Rahman al-Shaludi, who was shot and killed shortly after the October assault - had to evacuate, said Al Jazeera's Dalia Hatuqa, reporting from East Jerusalem.

The whole neighbourhood was closed off by the Israeli police, she said.

Al Jazeera's Stefanie Dekker, reporting from outside the demolished house in East Jerusalem, said that people in area say that this is a form of "collective punishment" even though the man responsible has been dealt with, and that it is being seen as "a wider way to punish ... even the extended family".

The demolition followed angry promises by Prime Minister Benjamin Netanyahu that Israel would take strict measures to deal with a rising wave of Palestinian attacks that in recent weeks have taken 11 lives - nine in Jerusalem, one in Tel Aviv and one in the West Bank.

"No one should feel sorry for us, for our demolished home," she said, refusing to give her name for fear of reprisals.

Netanyahu has vowed to revive the controversial policy of home demolitions, which Israel halted in 2005 after determining it was not an effective deterrent for attacks.

Meanwhile, Jewish worshippers returned on Wednesday to the synagogue, seeking comfort in prayer amid soaring tensions.

Angry confrontations

In the East Jerusalem neighbourhood of Jabal al-Mukaber - the hometown of the two Palestinians who carried out the attack on the Har Nof Synagogue on Tuesday morning killing five Israelis - Israeli troops were confronted by angry Palestinians.

The Israeli troops were headed to the area to demolish the homes of the Abu Jamal cousins who carried out the synagogue attack. Four rabbis - three with Israeli-US citizenship and a fourth who was an Israeli-Briton - were killed by Palestinians armed with a gun and knives. A police officer died of his wounds hours after the attack.